We all know how important KPIs are. The are the guiding stars showing you the path to follow for commercial success. KPIs keep everyone from investors to employees aligned to the goals that work for the company’s growth. Sales KPIs are a group of KPIs that ensure your ecommerce business is generating long term sustainable revenue and maximizing returns.

Essential Sales KPIs for E-commerce Startups

1. Total Sales

Total sales measure the overall revenue generated by your e-commerce store over a specific period. This KPI can be tracked hourly, daily, weekly, monthly, quarterly, or annually. Monitoring total sales helps you understand your business’s revenue trends and identify peak sales periods.

2. Average Profit Margin

Average profit margin, is a percentage that represents your profit margin over a period of time. It is calculated by dividing gross profit by total sales and multiplying by 100. This KPI helps you understand how much profit your business is making relative to its revenue.

Average Margin = Gross profit/Gross Sales x 100

3. Average Order Value (AOV)

AOV measures the average value of an order placed by your customers. Increasing your AOV can significantly boost your overall revenue and profitability. It helps you identify opportunities to increase the average order size through upselling and cross-selling strategies.

AOV = Total Sales/ Number of orders

4. Customer Retention Rate

This KPI measures the percentage of customers a company retains over a specific period, indicating customer loyalty and satisfaction. A high customer retention rate suggests that customers are satisfied with their experience and are likely to make repeat purchases.

Customer retention rate = ((Number of customers at the end of period – number of customers acquired during period) / starting number of customers) x 100

5. Number of Transactions

This KPI represents the total number of transactions over a specific period. When used in conjunction with average order size or total number of site visitors, it provides deeper insights into customer behavior and sales performance.

6. Conversion Rate

The conversion rate is the percentage of visitors to your e-commerce site who complete a desired action, such as making a purchase. A high conversion rate indicates that your site is effectively converting visitors into customers.

Conversion rate = Total number of conversions/Total number of visitors

7. Shopping Cart Abandonment Rate

The shopping cart abandonment rate tells you how many users add products to their shopping cart but do not complete the purchase. A high abandonment rate may indicate issues with the checkout process, such as complicated navigation, limited payment options, or unexpected costs.

8. New Customer Orders vs. Returning Customer Orders

This metric compares the number of new customers to the number of returning customers. Focusing on both customer acquisition and retention can drive loyalty, word-of-mouth marketing, and higher order values.

9. Cost of Goods Sold (COGS)

COGS represents the total cost of producing and selling your products, including manufacturing, employee wages, and overhead costs. Understanding COGS is crucial for pricing strategies and profitability analysis.

10. Total Available Market Relative to Market Share

This KPI measures your business’s growth relative to others within your industry. Tracking this metric helps you understand your competitive position and identify opportunities for market expansion.

11. Inventory Levels

Inventory levels tell you how much stock is on hand, how long products are sitting, and how quickly products are selling. Monitoring inventory levels helps you manage stock effectively, avoid overstocking or stockouts, and optimize inventory turnover.

12. Competitive Pricing

Competitive pricing measures how your product prices compare to those of your competitors. This KPI helps you ensure that your pricing strategy remains competitive and attractive to customers.

13. Customer Lifetime Value (CLV)

CLV estimates the total revenue a customer is expected to generate over their relationship with your business. A high CLV indicates that investing in customer loyalty and retention is worthwhile.

CLV = Gross margin % x retention rate x average revenue per customer

14. Churn Rate

Churn rate measures the percentage of customers who stop doing business with you over a specific period. A high churn rate indicates that you may need to improve customer satisfaction and retention strategies.

Churn rate = (Number of customers lost / starting number of customers) x 100

15. Customer Acquisition Cost (CAC)

CAC represents the cost of acquiring a new customer, including all marketing and sales expenses. By analyzing CAC, you can optimize your marketing strategies and focus on the most cost-effective channels.

CAC = Total sales and marketing cost / number of new customers

Tracking the right sales KPIs is essential for e-commerce startups aiming to achieve sustainable growth and long-term success. By regularly monitoring and optimizing these key metrics, you can gain valuable insights into your sales performance, identify areas for improvement, and make data-driven decisions to enhance customer experience and drive revenue.

Remember, the goal is not just to collect data but to use it to steer your e-commerce business towards success, just like a skilled pilot navigating through the skies. Start tracking these essential sales KPIs today and watch your business soar to new heights!